A high street footwear firm turned a £400 fine into a bill for more than £40,000 after claiming it was too busy to meet its pension responsibilities.
The case has prompted a fresh warning to employers by The Pensions Regulator (TPR) not to ignore their automatic enrolment duties.
Johnsons Shoes Company was issued with a £400 fixed penalty notice after it failed to comply with the law on the automatic enrolment of its staff into a workplace pension. For a more detailed explanation go to the Johnsons case report (PDF, 197kb, 6 pages).
The company had been required to check whether its staff qualified to be put into a workplace pension scheme and to confirm to TPR that it had done so.
Johnsons paid the £400 fine but still did not become compliant. Despite repeated reminders – and being warned that it would face a new fine that would increase by £2,500 per day if it did not meet its responsibilities – the Shepperton-based business continued to flout the law.
The fine reached £40,000 before the company finally became compliant. At that point, Johnsons refused to pay the fine – forcing TPR to take the business to court to secure payment.
Eventually Johnsons agreed to pay the £40,000 fine and £2,000 court costs, preventing the need for a full court hearing on the matter.
Charles Counsell, TPR’s Executive Director of Automatic Enrolment, said:
“The failure by Johnsons to act, despite our repeated warnings, left it with a completely unnecessary bill that was more than 100 times the amount it was originally fined.
“The vast majority of employers meet their automatic enrolment responsibilities. We will use all the powers available to us against the minority who choose to ignore their duties.
“Our message is clear: fail to comply with the law and you may be fined. Fail to pay your fine and we may take you to court.”
All employers have legal duties and can use the Duties Checker on TPR’s website to quickly understand exactly what they must do.
Employers experiencing challenges in meeting their automatic enrolment duties should contact TPR as early as possible to discuss their situation.
- A study published by the Department for Work and Pensions in December 2016 estimates that there will be an extra £17 billion of workplace pension saving per year in the UK as a result of automatic enrolment by 2019/20. The first workers were automatically enrolled into pension schemes in 2012, starting with the largest employers. The policy was introduced to address under-saving with millions of workers not putting aside enough for retirement, and only one in three private sector workers paying into a workplace pension.
- Timeline of the Johnsons Shoes case:
- 1 May 2014: Johnsons’ staging date arrives, meaning the company has five months to enter any qualifying staff into a pension scheme and to complete a declaration that it has done so.
- 30 September 2014: Johnsons fails to complete its declaration of compliance.
- 30 April 2015: TPR issues Johnsons with a compliance notice ordering it to complete the declaration of compliance by 29 June 2015.
- 3 July 2015: After contacting the company with a number of reminders, TPR issues Johnsons with a £400 fixed penalty notice for failing to respond to the compliance notice and orders the company to complete its declaration of compliance by 30 July 2015.
- 25 September 2015: Johnsons pays the £400 fixed penalty notice but still does not complete its declaration of compliance.
- 9 November 2015: TPR issues Johnsons with an escalating penalty notice (EPN) for failing to comply with the 30 April compliance notice. The company is told the fine will increase by £2,500 per day from 7 December until satisfactory evidence is provided that the declaration of compliance has been completed.
- 23 December 2015: Johnsons provides the evidence of compliance requested by TPR and the EPN stops accruing.
- TPR is the regulator of work-based pension schemes in the UK. Our statutory objectives are: to protect members’ benefits; to reduce the risk of calls on the Pension Protection Fund); to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of TPR’s functions under Part 3 of the Pensions Act 2004 only).